Issue No. 789

Emirates' Heavy Metal Muddle

Pushing Back: Inside This Issue

American, Southwest, and Alaska showed again that conditions in the U.S. weren’t as bad in Q3 as they were in Q2. But that’s not to say they still weren’t bad. In fact, they were awful, far from anything resembling a true recovery. There’s light ahead, however, even amid worsening infection rates, as traveler fears dissipate, testing trials begin, cost cuts are enacted, route networks are updated, and vaccine development progresses.

Southwest’s efforts to make a bad situation better involve unfortunate demands on workers, an unusual number of new destinations, a push for corporate traffic that might lead to codeshare partnerships, and possibly even its first-ever Airbus orders. Boeing might yet satisfy its smaller jet needs with MAX 7s. If not, the alternative is A220s.

In Mexico, recovery efforts are aided by massive capacity reductions. Aeromexico, as it removes planes, still has the weight of absent corporate and intercontinental traffic on its fortunes. Volaris and VivaAerobus on the other hand, are better positioned to benefit from the capacity rightsizing, as well as an active family visit/migrant worker market, Interjet’s disintegration, and Mexico’s lack of any restrictions on air travel.

Australia, with heavy restrictions even among states internally, hasn’t seen much of a domestic travel recovery yet. But with restrictions easing and the virus under control, Qantas expects robust demand before long. Even internationally, the skies are brightening as New Zealand tourists arrive, and as travel bubbles with various Asian countries appear possible.  

Near-impossible, unfortunately, is the situation at Hong Kong’s Cathay Pacific. It doesn’t have a domestic market to tap. Its traffic is more or less just as depressed now as it was early on in the crisis. The only option: Drastic restructuring, involving job cuts and the slaying of its Dragonair unit.


“If there is one thing we have learned and are committed to as a leadership team, it is that low-cost discipline is simply a requirement of this industry if you want to be able to survive in the downturn and thrive in the ups.”  

Alaska Airlines CFO Shane Tackette


July-September 2020 (3 Months)

  • American: -$2.4b/-$2.8b*; -107%
  • Southwest: -$1.2b; -88%
  • Alaska: -$431m/-$399m*; -75%
  • Aeromexico: -$131m; -77%
  • Volaris: -$99m/-$107m*; -47%
  • VivaAerobus: -$33m; -41%

*Net result in USD/*Net result excluding special items/ Operating margin

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Weekly Skies

  • American was an early bull in the Covid crisis. As May turned to June, domestic travel demand was showing firm recovery, encouraging the carrier — which helpfully has a more domestic-heavy network than either United or Delta — to get aggressive. It restored lots of flights and seats to popular leisure destinations like Florida and the Rocky Mountain region. At the time, it planned to fly almost 60% of its normal domestic capacity for July.

    Sadly, the bullishness proved premature. Covid spread worsened, travel restrictions tightened, and summer demand proved less robust than anticipated. With the planning flexibility to reverse some of its capacity restoration, American didn’t wind up materially worse off than its peers. But nor did it do any better despite that advantageous domestic exposure. From July through September, the airline lost $2.8b net, excluding special items. Operating margin was negative 107%, almost identical to what United reported and a few points worse than Delta’s negative 89%. American indeed cut capacity less than either of its main rivals, with ASMs down 59% y/y. And its revenues were correspondingly down by less — they declined 73%. But operating costs dropped less too — down 40%.

    What matters more is how effective American is at using crisis-time opportunities to enact structural improvements — improvements that address the margin weakness it suffered before the crisis. To be fair, much of its margin weakness in 2019 and early 2020 stemmed from temporary labor unrest and B737 MAX disruptions, as well as heavy exposure to troubled South American markets. As late as 2017, remember, American’s margins were actually pretty strong relative to peers (it beat United that year).

    One important structural reform underway involves its fleet, with more than 150 planes disappearing for good amid mass retirements of A330s, B767s, B757s, E190s, and CRJ-200s. At the same time, all B737s will be standardized with denser layouts by early 2021, with the standardization of A321s completed by springtime 2022. As for widebodies, American is left with an enviable fleet of just B777s and B787s, the latter acquired on presumably favorable terms thanks to an especially close relationship with Boeing. The MAX remains an aircraft with great potential for American and should be flying again soon — possibly by late December, the carrier said. It currently has 24 MAX 8s and 76 more on order, with lots of deferral flexibility.

    The company regrettably felt the need to furlough 19k workers after a thus-far failed industry campaign to renew federal payroll support. Less grimly, it followed United’s lead in axing most domestic change fees and implemented some other customer-friendly improvements to its travel policies and loyalty plan.

    American likes the way its network is positioned now for multiple reasons. For one, four of its major hubs (Dallas DFW, Charlotte, Phoenix, and Miami) are in the U.S.’s demographically growing Sun Belt. Phoenix and Miami, moreover, are giant tourist destinations where traffic declines have been less severe. American is the largest airline in the Caribbean and upper South America, both hotspots for the sort of leisure and family-visit travel that’s leading the recovery. Management sure enough mentioned Sun Belt markets, Mexico, and reopened Caribbean spots as areas of “positive recovery.”

    Alliances will play a key role in lifting American from the industry depression. It has newly formed relationships with Alaska and JetBlue at home, supporting close ties to IAG, Finnair, Japan Airlines, Qantas, and China Southern abroad. Other new partners include Gol (replacing Latam in South America), Royal Air Maroc, and Qatar Airways. Just before the crisis, American showed an eagerness to open novel new intercontinental routes with help from its partners — Seattle-to-Bangalore, for example. Executives separately make the point that while corporate business is important and currently depressed, it’s not uncommon for leisure yields to be even higher in some markets, notably originating from coastal cities like New York and Los Angeles.

    That said, markets like New York and L.A. haven’t been big money makers for American historically. But now, these are becoming a smaller part of its network. Its DFW and Charlotte hubs in particular — supremely profitable in normal times — are representing a larger portion of American’s overall flying. It’s at hubs like these where the carrier can efficiently aggregate and distribute what little demand currently exists. It also claims these hubs are producing big yield premiums versus rivals right now.

    In other developments, American recently renewed a distribution contract with Sabre. It’s borrowing money from Washington, amplifying a huge cash stash. It has more debt that any of its peers but no large repayment obligations in the near future, and minimal capital spending commitments. It’s operating lots of cargo-only flights. Cash burn is coming down as demand improves steadily if slowly. Pre-flight Covid testing should soon give a boost to markets like Hawaii, the U.K., and the Caribbean.

    Last month by the way, 45% of American’s domestic flights were at least 80% full (this was the case for just 25% of flights in July). It means the carrier can actively revenue-manage on more flights, up-selling to higher fares. This is now the case for more than half of all domestic flights. The upcoming Thanksgiving and Christmas holidays should provide further momentum, based on experience from past holidays like Labor Day and July 4th. CEO Doug Parker is himself now flying multiple times a week.  
  • Southwest is anything but happy with a $1.2b Q3 net loss. Or with a negative 88% operating margin. But seven months into the industry’s gravest crisis, CEO Gary Kelly listed some of the things that do make him happy. One is that this Q3 red ink was a lot less than the company feared it might be three months ago, when early demand momentum suddenly reversed. He’s encouraged by improved momentum for Q4.

    Revenues are at least growing faster than costs. People and planes are getting back to work. Payroll support from Washington remains a real possibility. Southwest is playing offense now, adding new cities (see Routes section). B737 MAXs should be back in the air soon. Cash is plentiful, with capacity to borrow more if necessary. Revenues will get a further boost when middle seats are unblocked next month.

    The airline eyes a bigger slice of the domestic corporate market when it revives, aided by a new strategy of selling through GDSs. Kelly thanked his workforce for achieving excellent service and operational reliability throughout the crisis. He thinks that the worst might be over. And looking ahead, he thinks Southwest has the industry’s best business model for the recovery, featuring low fares, low costs, no hidden fees, immense scale, zero longhaul international exposure, zero premium exposure, a loyalty plan still performing relatively well, and a strategy to win more corporate business as it returns. Southwest remains the nation’s only investment-grade airline. And it decided against taking a government loan, securing capital on favorable terms elsewhere.

    Even so, without federal wage support, it’s now forced to do something very un-Southwest-like: It’s asking all work groups for a 10% pay cut for 2021, targeting $500m in savings. In exchange, it promises no layoffs next year. Unions though, like the Southwest Pilots Association (SWAPA), reacted coldly, citing various criticisms of management.

    Average daily cash burn will be about $12m this month, with revenues expected to be down roughly 65% y/y, which is similar to September’s decline. That said, there’s a modest pickup in farther-out bookings, notably for the upcoming holidays. Corporate travel revenues, though down 89% in Q3, are showing a few green shoots. Many shorthaul routes remain weak. Same for quarantine-imposing regions like the New York-area and New England. On the other hand, Southwest sees pockets of strength in southern California, intra-California, Las Vegas, Denver, Phoenix, Texas, and Florida. It mentioned signs of life in midcontinent cities like Chicago, Kansas City, and St. Louis as well. Hawaii demand, too, is beginning to come back as the state relaxes its quarantine requirements for travelers that test negative for Covid.

    Kelly acknowledges that some corporate travel might structurally disappear forever. As for potentially losing some cost advantage if others restructure more forcefully, Kelly invoked negotiations underway with Boeing, conducted to ensure “the lowest cost narrow-body operation in the world.” It certainty has leverage with Boeing, all the more so as it contemplates replacement for its armada of B737-700s (see Fleet section below). Kelly also expects all rivals to face scale-related cost pressures as the whole industry shrinks. Southwest, meanwhile, will be better positioned to grow capacity by winning a larger share of corporate business.

    Would another merger be in order? Right now, one wouldn’t make sense because buying any airline would entail absorbing huge losses. But the idea is “always on the table.”
  • Alaska Airlines held its Q3 operating loss margin to negative 75%, with revenues down 71% y/y but operating costs down only 37%. ASM capacity declined 55%. Like all other airlines, Alaska saw conditions improve from Q2 but not as much as originally hoped, and not nearly enough to curtail a daily cash drain from operations. It burned through some $4m a day during the quarter and won’t reach cash break even by year end after all — that was its target earlier this year. Demand, alas, never did continue the promising trajectory it was on in early spring, losing momentum during a summertime Covid spike. Alaska also expected to be selling middle seats by now. Instead, it felt it necessary to maintain the policy, which results in lost revenue on full flights. A third reason why it won’t hit cash breakeven this year is a recent decision to restore more capacity to Seattle, a move that might drain some cash initially but also leave it well placed to capture growing demand, especially from Hawaii.

    The Hawaiian market is important to Alaska, normally representing a double-digit percentage of total company revenues (it’s a critical driver of the airline’s loyalty plan success too). Well, good news. Hawaii is finally reopening to tourists, sans quarantine, who can show a negative Covid test. Sure enough, bookings to Hawaii are now increasing “materially,” getting stronger day by day. Alaska’s hometown Seattle, keep in mind, was one of America’s strongest and fastest-growing economies before the crisis. And the crisis is actually strengthening many of its top companies — think Amazon, Microsoft, and Costco (let’s forget about Boeing for now). Alaska is strong in other tech-oriented West Coast economies as well, like Portland and San Francisco, where many workers — if not traveling for business yet — are maintaining high incomes, eager to take vacations, and often choosing to work remotely from, say, a short-term rental home in Hawaii.

    Alaska more generally seems optimistic about Q4 and beyond, noting an increasing willingness for people to book tickets farther in advance. The latest Covid spikes, it notes, are far from urban centers along the West Coast. The upcoming holidays are attracting a decent level of new bookings. Alaska’s elimination of change fees is helping. Fare sales and promotions are increasingly effective, and even at loss-making prices, the airline sees evidence that just getting people back on planes for the first time will make them more likely to travel again. One promotion offers a whole row of seats for the cost of just one ticket. Another offers big discounts every time Seattle Seahawks quarterback Russell Wilson throws or runs a touchdown during home games (note: Entering the weekend, he led the league with 19 this year, albeit some on the road). Alaska’s loyalty plan continues to generate revenue through its credit card partnership with Bank of America.

    In the meantime, Alaska (like everyone else) is reorienting its network to be more sun and snow focused. It also responded to JetBlue’s Los Angeles offensive with new LAX routes of its own. In summary, demand is improving, and the crisis is progressively easing with each month’s conditions better than the last. Now, Alaska thinks it’s finally time to sell middle seats again, starting with Hawaiian routes in early January. This month, ASMs should be down about 45% y/y. But only when passenger volumes are down by something similar will Alaska be able to reach cash breakeven.

    Recognizing that the airline will likely be smaller for a long time, management wants to remove $250m from its fixed cost base, with the goal of achieving pre-crisis unit costs even while 20% smaller. Getting there required almost 800 involuntary dismissals, roughly half of them from the management ranks. It will also require higher productivity and cuts in overhead. Importantly, Alaska will have an opportunity to replace its higher-CASM Airbus planes with larger and more cost-efficient jets as leases expire. Alternatively, it could renew the leases at much more favorable rates. It has a fair number of B737 MAXs already on the way. And it’s considering a new MAX order, which at this moment could be done at extremely attractive prices.

    Looking beyond the current crisis to a time when Alaska’s corporate clients start flying again, a new alliance with American will enhance its marketing reach globally. So will its decision to join the oneworld alliance. Last week, Alaska announced a new arrangement with Microsoft and the biofuel provider SkyNRG, aimed at reducing carbon emissions when the software firm’s employees travel.

    One final word on Alaska’s balance sheet: Relative to the cash it has on hand, debt levels are actually unchanged from where they were pre-crisis. More specifically, it ended Q3 with $5.4b in debt but $3.8b in cash, for an adjusted net debt of just under $1.7b, exactly where it was at the end of 2019.

    Said CEO Brad Tilden: “No one knows what kind of weather we’ll have, but we can build a house to withstand the worst storms and also to take maximum advantage of the good weather when it comes.”
  • Aeromexico, which filed for bankruptcy on June 30, no longer holds a quarterly earnings call. But it did publish its Q3 financial statements along with some commentary. Obviously, it lost money during the period — $131m to be exact. But operating margin, at negative 77%, was at least a step up from its negative 253% drubbing in Q2. The carrier managed to produce $212m in revenues last quarter, down by 75% y/y but lifted by resilient cargo demand and a gradual restart of suspended routes both domestically and internationally. Operating costs dropped 51%.

    As discussed in last week’s Airline Weekly Feature Story about Volaris, Mexico is taking a relaxed approach on travel restrictions, even welcoming American tourists without any need to quarantine. There’s no restriction on air service either. Not all tourists are ready to come, fearful of the virus and deterred by quarantines imposed by their own governments when they return. But resorts like Cancun and Cabo are sure enough seeing y/y international visitor declines that aren’t as severe as in many other international markets. Domestic tourists are flying to resort cities like Cancun as well, sometimes working remotely from hotels there. Some hotels are in fact catering to remote workers and even schoolers — “Work and learn from paradise,” bellows one pitch. Guests even have access to onsite IT support.

    As Volaris mentioned, the cross-border migrant worker/family visit market has some life in it as well, as reflected in strong remittance flows. Aeromexico’s business, of course, has a large corporate and intercontinental component too, holding back its recovery. Its government didn’t provide much help, but management can breathe easier now with $1b in bankruptcy financing led by the U.S. investment firm Apollo, which also is supporting Avianca during its bankruptcy.

    Restructuring in court isn’t fun. But it can be a powerful tool to lower costs. Aeromexico negotiated more favorable leases on the majority of its fleet, which now stands at 107 B787s, B737s, and E-Jets. The figure includes six B737 MAX 8s still grounded. In the meantime, rival Interjet appears to be dying, Mexico City’s notorious airport congestion is less of a concern, and Delta remains a crucial partner.

    Aeromexico separately renegotiated its relationship with AIMA, which owns nearly half its loyalty plan — the carrier now has an option to repurchase that stake (good for seven years) if it’s willing to pay at least $400m. Gradually, the airline is reopening routes, including key cities in South America. It’s seeing “some recovery in travel.”  
  • As Aeromexico navigates the crisis in the confines of the courtroom, its low-cost rival Volaris is salivating at its future prospects. As it described during its Q3 earnings call, Mexico will see a reduction of 107 narrowbody aircraft due to the Covid crisis, which is a third of the entire country’s narrowbody fleet. The departing capacity also is equivalent to all 86 of its own high-density A320-family aircraft. Aeromexico and Interjet are the ones shedding the planes, and both are based at Mexico City’s main airport. Suddenly, slot scarcity there is no longer an issue, and Volaris is wasting no time in launching new routes from the capital. Since the start of the crisis, it’s opened six new domestic routes from Mexico City (to Villahermosa, Ciudad del Carmen, Torreon, Tampico, and Campeche), plus six new cross-border Texas and California routes (to Houston, Dallas-Fort Worth, Fresno, Ontario, San Jose, and Sacramento).

    Volaris, by the way, is now the number two player in Mexico City, behind only Aeromexico. Even so, some 40% of its routes network-wide compete only against long-range buses. For all its opportunities, the LCC does have near-term crisis management tasks to address, just like every other airline. Its negative 47% operating margin for Q3 was mild relative to the carnage seen elsewhere. But still, a negative 47% margin is a negative 47% margin. Net loss excluding forex gains was $107m. Demand among Mexican family-visit, migrant, and leisure travelers recovered faster than almost anywhere else outside East Asia, New Zealand, Brazil, and Russia.

    And this enabled Volaris to cut Q3 ASM capacity just 25% y/y. Revenues did drop 50% however, and operating costs just 11%. Operations, furthermore, are still producing negative cash flow, and that won’t change any time soon. Management in fact thinks cash break even might not come until late 2021, in part because it will have to catch up on aircraft lease payments it deferred the last two quarters. Q4 cash burn will likely be worse than it was in Q3. Still, demand is indeed trending up, allowing Volaris to avoid involuntary furloughs even without any meaningful government aid.

    Returning to the issue of future industry capacity within Mexico, there’s still the open question of when Aeromexico will get its B737 MAXs flying again. To be sure, Volaris benefited a lot from its rival’s missing MAX problem in 2019. As for its own capacity, the LCC will reopen its Costa Rica-based Central American unit late next month. In the meantime, ancillary revenues declined notably less than ticket revenues, boosted by new “combo” fares that allow passengers to add on individual services like priority boarding or extra bag allowance. Also helping: A new website and an upgraded Navitaire reservation system; Ancillaries represented 45% of Q3 revenue.

    Volaris expects to fly about 90% of its normal capacity this quarter, as it boasts of enjoying the “fastest airline recovery in North America.” Passenger traffic volumes, it believes, will equal 2019 levels by the end of 2021’s first half.
  • VivaAerobus, another Mexican ultra-LCC, looks a lot more like Volaris than it does Aeromexico or Interjet. Its operating loss margin was even a bit better at negative 41%, amid a 33% y/y reduction in ASMs and a 54% drop in revenues. Viva was able to get operating costs to decline 23%. Based in Monterrey and owned by a bus company, Viva, too, is eyeing new opportunities in Mexico City, and benefiting from Aeromexico’s bankruptcy and Interjet’s existential struggles. This month, according to Cirium schedule data, its seat capacity will be down just 10% y/y, compared to down 19% for Volaris, 44% for Aeromexico, and 93% for Interjet.

    At roughly half the size of Volaris, Viva has less scale. But it likewise plans to grow with new NEO planes, having recently received its first A321 NEOs.

    The Mexican airport operators OMA and ASUR by the way, in their own Q3 earnings calls last week, mentioned the new airport in Tulum south of Cancun that Mexico’s military plans to build and operate. They discussed Mexico’s traffic light system for advising citizens about Covid’s threat in different areas of the country (Cancun’s state Quintana Roo is incidentally at orange, signifying high risk). OMA mentioned Mazatlan, a Pacific beach resort, as having the smallest y/y traffic decline of any of its airports. On the other hand, business-heavy routes between big cities like Mexico City and Guadalajara are seeing some of the biggest declines. 
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  • Here’s an anecdote — from a highly-influential business person — that will send shivers down the spines of airline executives. Tata Group Chairman Natarajan Chandrasekaran, in an interview with the New York Times, said that before the Covid crisis, he would fly from India to the U.S. to pitch deals worth just $50k. Recently, however, Tata’s consultancy arm closed $2b worth of deals with “five or six Zoom calls.” The history of new communications technology, be it telephones, fax machines, email, or videoconferencing, is always associated with predictions of diminished need for business travel.

    Those predications have always proved wrong in the past, if simply because a world made smaller by technology greatly increases the number of business opportunities. Yes, you can send an email to your clients across the country rather than see them in person. But now you have clients all over the world because it’s so easy to sell stuff via the internet. Now you’re building a factory in Vietnam you need to visit, and have sales teams based in Canada, Brazil and Australia. You get the point. Will videoconferencing be different? Possibly. But don’t bet on it. If the Tata Group winds up buying Air India, by the way, it would be a sign that Chandrasekaran thinks more highly of aviation’s future than his comments to the Times suggest.
  • Despite Brazil’s difficulties with Covid, many Brazilians are resuming activities like dining out at restaurants, going to the beach, and yes, taking leisure trips by air. Azul CEO John Rodgerson, speaking with NeoFeed, pins an exact start date for the recovery: Sept. 7, Brazil’s Independence Day. “That weekend,” he said, “Brazilians decided: ‘I did my part, I quarantined, and now I’m free.’”

    Corporate traffic still is moribund — nobody right now is showing up at the airport just before the flight and buying pricey full-fare tickets. But that will return eventually, Rodgerson believes. People are by contrast taking leisure trips, in some cases substituting trips to Miami — very common for Brazilians — with trips within the country. Azul is flying 60% of its total network and 65% of its domestic network. It has a large stockpile of cash, so much so that’s it not for now taking finance help from the national development bank (it’s happy to have that available if conditions worsen later on).

    Rodgerson is extremely bullish on Azul’s new codeshare with Latam, which gives it market access that Delta was willing to pay $2b for. He calls the new arrangement the largest codeshare alliance in the world, providing strength in Sao Paulo where Latam has superior schedules, and strength outside the Sao Paulo-Rio-Brasilia triangle where Azul has heavy coverage.

    He’s also bullish on its new Azul Connect unit, acquired to provide more slots at key airports, more regional connectivity, and more cargo capabilities. Azul, in fact, is starting to hire back some of the people it had to furlough. It’s also a more efficient airline than it was before the crisis.
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  • Southwest came the closest yet to stating that it might buy something other than B737s. Not that it’s ready to place an order with Airbus tomorrow. But it does have a large fleet of B737-700s to replace and needs to start doing so as early as 2025. So sometime “within the next year or so,” it has to decide whether to buy B737 MAX 7s or similarly sized A220-300s.

    It’s adamant about needing a 150-seat plane for many of its smaller markets — the many MAX 8s it has on order are simply too big for markets in say, intra-Texas like Houston-Midland. When will those MAX 8s return to service by the way? Not this year, as American is targeting. Southwest doesn’t see MAXs flying again until next year’s second quarter. 
  • Boeing is reviving talk about an all-new plane that would be larger than its largest narrowbodies but smaller than its smallest widebodies, The Wall Street Journal first reported. Put another way, a product for the segment in between the B737 MAX 10 and B787-8. The concept was actively discussed before the crisis though put on hold last year as Boeing’s new CEO navigated the MAX crisis and other woes. Boeing will perhaps have more to say on the new plane concept when it announces financial results this week. Make no mistake, a plane in the size range, with low fuel burn and good range, would attract a lot of shoppers.

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  • Airlines, even LCCs, are always trying to wring more money from their loyalty programs. They’re powerful profit generators, after all, not only securing customer loyalty but more importantly producing revenue through the sale of miles to banks and other third parties seeking to reward their own customers with travel perks. Currently, airlines are finding that their miles are still in high demand despite few opportunities to fly anywhere during the pandemic.

    Spirit, an ultra-LCC, started its Free Spirit program back in 2006, alongside its $9 Fare Club subscription service. But it never represented a major part of the airline’s business. It’s hoping for greater significance with a complete revamp of Free Spirit announced last week and taking effect in January. Travelers will earn points based on dollars spent rather than miles flown, a common practice these days. Interestingly, you get double points for dollars spent on ancillary items.

    For the first time, Spirit will offer elite status to its highest spenders, granting free checked baggage, for example, to those who attain silver or gold level. Along with changes are enhancements to the benefits associated with using credit cards Spirit jointly offers with Bank of America (and with Promerica in Latin America).
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Routes and Networks

  • Another new city for Southwest? No, three new cities. That’s right. In the first half of next year, the world’s largest LCC will bring its LUV to Colorado Springs, Savanah, and Mississippi’s capital, Jackson, the latter a market it served once before. As it explained during its Q3 earnings call, a big reason why Southwest didn’t add so many cities in the 2010s was the simple fact that it had a fleet deficit — not enough planes, in other words, to take advantage of all its opportunities.

    That’s changed completely. It now has a fleet surplus, and it’s willing to try markets that might attract some leisure demand during an industry depression. Southwest remember, is also adding Miami, Palm Springs, and two ski destinations in Colorado (Montrose/Telluride and Steamboat Springs). Not stopping there, it’s getting into Chicago O’Hare, recognizing that when it does come time to grow again in the Windy City, Midway airport won’t have the capacity to accommodate. Besides, if there’s ever a time to grab scarce gates at O’Hare, now is it.

    Finally, it’s re-entering Houston’s Bush Intercontinental airport, viewing it necessary to capture future growth in booming parts of the giant metro area. Hobby airport, located south of the city, is not where much of the high-potential demographic growth is happening. Southwest, it’s important to note, is also seeking more connecting traffic through key mid-continent hubs like Denver, Nashville, and St. Louis. Areas where it’s adding capacity right now, relative to last year, are Hawaii and Florida’s Gulf Coast, including Fort Myers, Pensacola, and Panama City. Don’t forget though, that it exited some markets like Newark and Havana.

    Not to bury the lede, but a final thought here might be the most interesting thing Southwest said in its Q3 call: It is very much interested in codeshare relationships with international airlines to help attract more corporate customers. 
  • Beware of the Bari battle. Ryanair and Wizz Air, on the same day, announced new routes from the Italian coastal city, located on the Adriatic Sea across from Albania. Italy happens to be Ryanair’s largest country market, after years of exploiting the ineptitude of Alitalia. Clearly, it thinks there’s more exploiting to do. And Wizz clearly feels the same.
  • Icelandair, which lives and dies on transatlantic travel, published its all-important summer schedule last week. Seat capacity will unsurprisingly be up from this summer but still 25% to 30% smaller than 2019 levels, or down even more pending the status of travel restrictions and the willingness of Americans and Europeans to travel internationally. As of now anyway, the schedule features 22 destinations in Europe, connecting with 10 destinations in North America, three of which are in Canada. Tenerife in Spain’s Canary Islands will be a new destination.

    Even if demand does recover quickly, financial recovery will likely take longer. One reason for that: The relaxed revenue management and ticket rule policies carriers feel compelled to adopt. Icelandair, like most airlines, will allow ticketed customers to change their flight at any time before departure with no fees. Alternatively, they can get a voucher for future travel. This is of course costly because charging fees for ticket changes (on cheaper tickets) allows carriers to charge more for fares that don’t have these fees. Think of it as charging more for tickets with change flexibility — which you can’t do if all your tickets now have change flexibility.  
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Covid Crisis 2020


  • Lufthansa gave a quick preview of its Q3 financial results, stating predictably that losses weren’t as severe as those in Q2. Like other European carriers, Lufthansa restarted some flights in June and enjoyed a brief period of decent shorthaul demand around the July summer peak. It also managed to lower its costs significantly. Nevertheless, its Q3 operating loss excluding special items was roughly $1.5b. It plans to provide a full release of its results on Nov. 5.
  • IAG likewise provided some preliminary Q3 financial data. And just like Lufthansa, it said operating loss excluding items would be about $1.5b, in its case equivalent to a negative 108% operating margin. Lufthansa remember, has a much larger cargo operation than IAG, which is helpful right now. IAG’s business is heavily dependent on transatlantic passenger traffic to both North and South America. During Q3, IAG’s ASK capacity declined 79% y/y, its RPK traffic fell 88%, and its load factor was just 49%.

    The figures cover all of the group’s airlines, namely British Airways, Iberia, Aer Lingus, Vueling, and Level. A pending takeover of Air Europa is subject to renegotiating a price more appropriate to today’s depressed conditions. This quarter, IAG will operate at most just 30% of last year’s capacity, with demand coming in lower than expected due to Europe’s latest Covid outbreak. The company no longer expects to break even on cash flow this quarter. Full Q3 results will be released on Oct. 30.  
  • KLM’s chief Pieter Elbers was the latest guest on Eurocontrol’s “Aviation Hard Talk Live” series, a Q&A about the latest pandemic-era trends. Amsterdam, as it happens, is currently the busiest airport in Europe, with flights down about 50% y/y, compared to 75% for Europe as a whole. The reason is Amsterdam’s utility as a hub, which Elbers believes will be more important than ever as industry capacity declines. He gives the example of Billund to Little Rock, a market no airline would ever serve nonstop. “There’s not going to be a direct flight, not tomorrow, not the day after tomorrow, not in the next 10 years.” This means a hub like Amsterdam is essential.

    Because of so many such itineraries involving secondary cities, KLM is the largest European operator of Embraer regional planes. It’s already, furthermore, been able to reopen all of its European destinations. Elbers separately sees Europe eventually following a path of consolidation mirroring that which has occurred in the U.S. He also thinks people are avoiding flights right now because of inconsistent and confusing travel restrictions, not fears for their health.

Northeast Asia

  • For months now, Cathay Pacific’s workers have been anxiously waiting for the hammer to drop. Last week, it dropped. The airline, getting by with money from Air China, Qatar Airways, and its government, unveiled a major restructuring plan that will involve 8,500 permanent layoffs. That’s a quarter of its entire workforce. What’s more, it’s asking those who remain to accept major pay and benefit cuts. One key aspect of the plan is a decision to close Dragonair, a wholly owned subsidiary specializing in narrowbody flights to mainland China. It hopes to retain Dragon’s traffic rights to maintain its 23 mainland routes using the Cathay brand.

    But Hong Kong Airlines and a prospective startup called Greater Bay Airlines (linked to Shenzhen’s Donghai Airlines) will possibly want to claim some as well. Groupwide, Cathay expects to operate just 10% of its normal capacity for the rest of 2020, and less than 50% for all of 2021. Cash burn exceeds $200m a month. Passenger volumes were down 98% y/y in September. It’s relying heavily on student traffic to the U.K, including those connecting from the mainland. It also highlighted charters it’s adding to meet demand between Shanghai and Israel. Connecting traffic, by the way, accounted for a third of its September business.

    The Christmas cargo rush should help. So should a new travel bubble between Hong Kong and Singapore. But “the future remains highly uncertain.”


  • CEO Karen Chan, speaking with Dennis Schaal at the Skift Asia Forum, says a big advantage she has is data on the 75m people who’ve flown AirAsia over the years. The travel site thus doesn’t need to spend big money acquiring new customers, allowing it to instead focus spending on converting them to buy things other than flights. “We are the only OTA that has metal,” she says.

    Chan also points out that is the only online travel site than can revenue manage its own flights, giving the example of an early morning or late evening Singapore-Kuala Lumpur flight that it knows will be lightly booked with business travelers. So it can unilaterally decide to offer cheap travel packages using those flights. Chan said it will soon have a deal to sell Turkish Airlines flights through And talks to do the same with some Middle Eastern airlines are progressing.


  • Qantas used its annual shareholders meeting to update investors on crisis-era developments. In recent weeks, it said, demand has shown “some positive signs of fresh recovery.” Though Australia has battled the coronavirus effectively, its tactics have included internal travel restrictions that have at times frustrated Qantas. It thought it could be operating 60% of normal domestic capacity right now, not the 30% it’s actually flying. In July, a winter month in Australia, Victoria state saw a second wave of infections that led other states to close their borders.

    More recently though, states like South Australia and Tasmania have reopened to domestic visitors. Even better, Australia now welcomes New Zealanders without any quarantine mandates (though travelers still have to quarantine after returning home). Qantas expects a further easing of travel restrictions between Australia and countries with low infection rates, naming Japan, Singapore, Korea, Taiwan, and nearby Pacific islands as near-term candidates. It has no doubt about pent-up desire to travel, noting “clear signs of very strong domestic travel demand.” When South Australia state opened to New South Wales recently, Qantas and Jetstar sold 20k seats in just 36 hours.

    Restarting flights to countries unable to control the virus, like the U.S. and the U.K., will take much longer, perhaps late next year after enough people are vaccinated.

    For much of this winter, routes within states saw a big jump in demand, in some cases reaching levels that exceeded year-ago levels. Examples include Brisbane-Cairns (within Queensland), Brisbane-Townsville (Queensland), and Perth-Broome (Western Australia). Qantas and Jetstar are now launching lots of new domestic routes to chase leisure demand where it exists. In the meantime, the commodity sector’s demand for charters remains strong. So does demand for cargo, Qantas loyalty points, and even scenic flights.

    Never one to be complacent about costs, CEO Alan Joyce is working to ensure Qantas remains competitive with Virgin Australia, which slashed its cost base in bankruptcy. Joyce made it clear to unions that whatever labor concessions Virgin manages to extract going forward, Qantas will need something similar. Remember that REX will enter the Sydney-Melbourne-Brisbane triangle market with full-sized narrowbodies. Says Joyce: “What has become crystal clear is that the Qantas Group after Covid has to be structurally different to the Qantas Group before Covid.” The airline is also negotiating new arrangements with travel agencies, outsourcing some of its ground handling, ending some sports sponsorships, and so on.

    Longterm, ultra-ultra-longhaul flights to London and New York from Australia’s east coast — with range-enhanced A350s featuring a new first-class product — remains an ambition. B747s are gone but A380s, though grounded for now, will eventually return.
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Feature Story

Emirates has a jumbo problem. Its planes are too big.

It’s January 2022. Covid-19 is no longer a serious deterrent to air travel. People are flying again, within and across borders. The airline industry has entered recovery mode. What does it all mean for Emirates?

Aside from America’s Big Three, Dubai-based Emirates is the world’s largest airline (ranked by available seat kilometers). And with that kind of scale, don’t discount its post-crisis prospects. It will still have a supportive home government. It will still have its first-rate reputation for quality. Location, furthermore, still makes Dubai the Times Square of global aviation. Some things never change.

But there’s no overlooking the pessimistic case. At a time when all airlines face new vulnerabilities, new uncertainties, and new challenges, Emirates faces one that stands out, one that dangerously threatens its status among the industry’s elite. Emirates — there are no two ways about it — is overgauged. 

What does that mean? It means the airline’s planes are too darn big.

Long before the Covid crisis started, Emirates had an A380 problem. As reported in Airline Weekly many times over the years, the A380’s economics simply don’t work for most markets. It has four engines. It’s not well-designed for cargo. It’s too large for all but a few routes. It requires special airport infrastructure. Densify B777-300ERs with 10 seats across in economy class and suddenly, you have a plane with almost as much passenger capacity as the A380 — and significantly more cargo capacity — but half the number of engines. It’s quicker to board, service, and turn too.

Sure enough, Emirates long ago did just that sort of B777 densification. As President Tim Clark himself told the Wall Street Journal in 2013: “On a 777, 10-abreast is the way to go. You’d be nuts to do it any other way.” No wonder why A380s, after some early enthusiasm 20 years ago, never caught on. And no wonder why most airlines that did buy the plane — Air France, Lufthansa, Qantas, and Qatar Airways, for example — are now grounding them. Singapore Airlines is currently using one of its A380s as a restaurant. Bon appetit.

Emirates, by contrast, can’t just ground its A380s. Why not? Because it has so many of them — 115 at the start of its current fiscal year that began in March. All it flies are A380s and B777s. Nothing else. Both planes, incidentally, are part of the plane market’s VLA segment (very large aircraft) that’s been struggling to attract orders for several years now. Emirates itself rejected a proposed A380-NEO when Airbus was trying anything to salvage the plane’s future. Instead, the carrier cancelled many of its orders, forcing Airbus last year to announce an end to A380 production in 2021. More specifically, Emirates last year said it would take just 14 more A380s through 2021, abandoning plans to ultimately have a fleet of 162.

In good times, Emirates probably does make money with A380s on some routes from Dubai — extremely busy and premium-heavy routes like New York and London, perhaps; maybe routes to other slot-controlled airports besides Heathrow, like Tokyo Narita; maybe routes where Emirates is constrained by bilateral agreements, like Toronto. Maybe ultra-longhaul routes that attract huge volumes of connecting traffic to India, like San Francisco. But for most of routes, the plane is simply too large.

Because of its lack of fleet versatility, Emirates is even forced to fly the massive plane on very shorthaul routes where narrowbodies are more effective (its latest A380 route is Jordan’s capital Amman, just 1,300 miles from Dubai; like a Boston-Miami flight). In 2015, Emirates introduced a two-class version of the giant plane — no more first-class cabins with showers and other luxuries. With more than 600 seats, this version was aimed at routes without much premium traffic, like Bangkok. It added operational complexity though, not to mention a lot more seats that needed to be filled.

Just months before the current Covid crisis, Emirates said it would belatedly add a premium economy product, something that’s worked well for many competing carriers around the world. Reluctant though it was to risk cannibalizing business-class demand, Clark and his team understood the waning purchasing power of the energy sector, a critical for one an airline based in the Middle East.

To be clear, Emirates saw an immediate increase in profits when oil prices started collapsing in late 2014. All of those big planes, after all, use a lot of fuel. But the oil bust caused longer-term damage to its revenues as well, weakening neighboring economies like Saudi Arabia and other important markets like Russia and Africa. A strong U.S. dollar, typically associated with low oil prices, would be another drag on the carrier’s revenues over the last half of the 2010s. So too would excess capacity as nearby rivals grew by double digits. Turkish Airlines, for one, grew ASKs 14% in 2015 and 11% in 2016 before slowing things down in 2017. 

Last year, Emirates announced yet another step to reduce its reliance on high-priced business class tickets. It began unbundling its premium product, offering business class fares that don’t include lounge access, advanced seat selection, and other perks.  As mentioned, the carrier began the fiscal year with 115 A380s. Its B777 fleet totals 155. And that’s all it has. But just as it’s changing its product and pricing to reflect new realities, it’s also changing its fleet strategy. It now has 50 A350-900s on order, along with 30 B787-9s. It’s these smaller, newer-generation midsized widebodies that seem more appropriate for a post-crisis demand environment. In fact, they were already the industry-favored widebody products before the crisis. Emirates at one point placed tentative orders for A330 NEOs and B787-10s as well.

It’s belated downgauging, however, still leaves it overgauged for many years to come. Even more worryingly, Emirates ordered 126 of Boeing’s next-generation B777s, including both -8 and -9 versions. The plane is larger than the prior-generation B777s and was originally envisioned by Emirates as an ideal replacement for A380s as they retired. Indeed, they’ll have far superior economics. But will they likewise be too large for most of the carrier’s markets? The new B777-Xs, by the way, are finding few other buyers, which could spoil its value as an asset. Without a critical mass of operators, aircraft lessors won’t touch it. And if lessors won’t touch it, there won’t be much of a secondary market for Emirates to sell the plane when it sees fit, whether to manage capacity or raise money through sale-leaseback arrangements. A380s have this problem — lessors won’t touch them. B777-300ERs on the other hand do not.

The future of Emirates and its Dubai hub, to be sure, will depend a lot on the city’s ability to maintain its status as a magnet for tourists, businesses, and migrant workers. Helpfully, the economy doesn’t depend much on energy exports like most of its neighboring hub cities (i.e. Abu Dhabi, Doha, and Riyadh). It does have heavy exposure to real estate and construction, the prospects for which are uncertain. It of course has major exposure to the aviation sector too, itself with uncomfortable uncertainties. Emirates is surely keeping an eye on India as rivals there plot ways to recapture intercontinental traffic that currently flows through Gulf hubs. Fading are the days when Emirates faced just two weak Indian rivals, Air India and Jet Airways. Vistara, backed by Singapore Airlines, is now flying B787s overseas. SpiceJet is moving into the longhaul market. IndiGo might eventually follow.      

Emirates might be eyeing low-cost carriers too, now armed with Airbus NEO planes that stretch across longer distances. Jazeera Airways now uses NEOs to link Kuwait with London, a big Emirates sixth-freedom market. Air Arabia’s A321 NEOs link Sharjah, an alternative airport for Dubai, to cities like Kuala Lumpur and Vienna. When Airbus starts delivering A321 XLRs later this decade, LCCs will have even more longhaul options.

In the meantime, European and U.S. airlines are adjusting their longhaul strategies to prioritize family-visit travel, resulting in new routes that often overlap with Emirates. British Airways and Virgin Atlantic, for example, are adding new routes to India and Pakistan, making stops in Dubai unnecessary in more cases. United is adding new India nonstops as well, not to mention new flights to Africa. That’s less need for a Dubai stop if you’re flying between, say, San Francisco and Bangalore, or between the New York area and Johannesburg. Make no mistake: The Emirates North America franchise greatly depends on lowish-yield Indian migrant and family-visit traffic.  

Eventually, Qantas and Air New Zealand will revive their ultra-longhaul ambitions, further slicing into Gulf carrier sixth-freedom markets. (Never mind that Qantas and Emirates are joint venture partners). Also keep in mind that cheap fuel — and fuel is very cheap right now — makes ultra-longhaul routes that overfly Dubai more economically viable. So, incidentally, do the latest midsized widebodies, led by B787-9s and A350-900s.

Steven Udvar-Hazy of Air Lease Corp. wonders if Gulf carriers face an uphill climb out of the Covid crisis, sensing passengers will look to avoid connecting itineraries. “The other thing that we’ve seen,” he recently told Aviation Week, “is that when people travel, they want to minimize their exposure to the ground experience [and] airport terminals so that the idea of going through hubs and connecting between multiple flights appears to be less psychologically attractive… people are seeking direct routing, nonstop flights, and avoiding having to make connections and dealing again with the airport terminal experience and exposure. So this has had a negative effect on the Gulf carriers, particularly out of the Middle East.”

KLM’s Pieter Elbers, on the other hand, said in a discussion hosted by Eurocontol that hubs will become more necessary in the coming several years as the number of available nonstop flights decreases. Udvar-Hazy might be right, but the anti-hub sentiment he describes might be temporary, dissipating after the world gets vaccinated.

Either way, Emirates will enter a period of slow demand growth, which poses heavy burdens on a carrier whose business model has long depended on growth and volume. Its past success has likewise depended on ever-increasing intensity of global commerce, which is also at risk amid tensions between the world’s two largest economies America and China. The Emirates model depends on Indian software professionals flying to North America, on African tourists flying to the beaches of Europe, on Chinese construction workers flying to Africa, on oil executives shuttling between Riyadh and Moscow, on European expats flying home from Australia… in short, it depends on people travelling from everywhere to everywhere. Does that world still exist post-Covid?

Emirates will have the unbending support of its home government. It has a sister low-cost carrier as well, FlyDubai, which could help in areas of the network where narrowbodies are more effective. In the meantime, key rivals have their own post-crisis headaches to manage. Capacity everywhere is dropping dramatically. Cargo, an important cushion during the current crisis, is a big revenue generator for Emirates. In the background is a much-rumored tie-up with Etihad, which could perhaps address some of the fleet shortcomings.

There’s no quick solution though. Under almost all potential circumstances, Emirates will be overgauged for years to come. A380s. B777-300ERs. B777-Xs coming. Where to put all that heavy metal?

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Around the World

A look at the world’s airlines, including end-of-week equity prices

Around the World: October 26, 2020

Airline NameChange From Last WeekChange From Last YearComments
American1.1%-57.2%Will open a new regional terminal facility at Washington Reagan next year; rare chance to expand there
Delta8.0%-36.8%Alone among the Big Three in blocking middle seats but still, its Q3 loss margins were less severe
United11.3%-57.7%Ended Q3 with 292 planes on firm order, compared to Delta’s 240 and American’s 230
Southwest7.8%-24.0%Still working out final MAX delivery schedule with Boeing; definitely doesn’t need 48 next year, which was its original plan
Alaska5.6%-39.5%Horizon unit started flying E175s within Alaska last week; deployment includes Anchorage-Fairbanks route
JetBlue9.7%-27.1%Reaches new contract agreement, subject to ratification, with TWU-represented flight attendants
Hawaiian16.1%-43.8%Southwest mentions, during its Q3 earnings call, an intention to launch new San Diego-Honolulu flights
Spirit14.8%-50.1%Barbados in the Caribbean looking to privatize its airport; Mexico’s OMA airport company, for one, says it’s interested
Frontier(not publicly traded)Southwest, in discussing the industry’s overstaffing problem, says some of its airports have double the staff they need right now
Allegiant9.4%-7.8%Montana the U.S. state with smallest y/y decline in pax flights; down 4% (A4A, Cirium)
SkyWest10.7%-41.6%New York the U.S. state with largest y/y decline in pax flights; down 67% (A4A, Cirium); Hawaii has largest drop in TSA pax counts
Air Canada9.5%-63.1%Arguing with WestJet over which carrier has the fairest refund policies
WestJet(not publicly traded)Alberta province, where it’s based, trialing shorter quarantine periods for inbound int’l air travelers
Aeromexico-7.1%-70.2%Ailing rival Interjet continues to face escalating pressures from various unpaid stakeholders
Volaris7.1%-8.2%Says an international route typically takes 12 to 18 months before reaching profitability
LATAM-3.1%-86.0%Brazilian domestic ASK capacity was down 58% y/y in Sept.; domestic capacity in other country markets was down 82%
Gol3.3%-46.8%Has more than 90 interline and codeshare partnerships including its new arrangement with American
Azul6.3%-48.8%Brazil, like Mexico, has no border entry restrictions on foreigners
Copa11.1%-45.3%Sabre, fresh off of renewing its distribution contract with U.S. giant American, does the same with Copa
Avianca-1.6%-90.0%ASUR, which owns many Colombian airports, says Bogota-Medellin route could take longer to recover due to heavy biz component
Emirates(not publicly traded)Currently operating A380s to Cairo, Paris, London Heathrow, Guangzhou, and Moscow; Amman soon
Qatar(not publicly traded)Says it probably won’t fly its 10 A380s again for at least another two years
Etihad(not publicly traded)Dubai-based company in negotiations to invest in Israeli carrier Israir
Air Arabia0.0%-19.0%New domestic Moroccan route will connect Casablanca with southern Sahara gateway city of Guelmim
Turkish Airlines-1.7%-12.2%LCC rival Pegasus launching Moscow flights to Antalya next month amid signs of growing Russia-to-Turkey tourism
Kenya Airways0.0%35.8%Uganda Airways, launched last year, to get its first A330-800 NEO soon; a rare NEO buyer that chose -800s not -900s
South Africa Air.(not publicly traded)Emirates strengthens its South African coverage by inking interline deal with SA Airlink, a privately owned independent regional carrier
Ethiopian Airlines(not publicly traded)Nigeria, one of Ethiopian’s most important markets, experiencing nationwide protests; happening as economy reels from cheap oil
IndiGo3.2%-17.6%Jet Airways, trying to revive with new owners, lost possession of its valuable airport slots; can it get them back?
Air India(not publicly traded)Losses a big burden for India’s government, especially now as it looks for ways to support the economy during crisis
SpiceJet8.9%-54.5%Financial Express notes that Goa has remained popular with tourists throughout the crisis; visitors coming from U.K., Russia, etc.
Lufthansa12.0%-47.1%As of right now, its Q4 schedule will at most feature just 25% of normal capacity; expects low demand all winter
Air France/KLM9.6%-68.8%Airbus putting plans in place to ramp up A320/21 NEO production as soon as crisis ends
BA/Iberia (IAG)13.8%-79.0%Would-be subsidiary Air Europa (takeover still in limbo) plans to gradually rebuild its critical Latin American network
SAS-7.6%-84.0%NY Times looks at Iceland’s tourism sector; grew rapidly for years aside from momentary hits from forex trends, Wow’s collapse
Alitalia(not publicly traded)Re-entering Milan Malpensa but just with cargo flights; pax business focused on Rome Fiumicino hub
Finnair6.1%-93.5%Will cut about 600 jobs in Finland and another 100 elsewhere; doesn’t include temporary furloughs
Virgin Atlantic(not publicly traded)London Heathrow now trialing on-site Covid tests for departing pax; results returned in one hour
easyJet16.5%-54.7%Flybe, which collapsed shortly after Covid crisis began, could get second life with new investors; was briefly owned by Virgin Atl.
Ryanair12.0%9.9%Germany and England remove Canary Islands from high-risk category; people can now go without quarantining on return
Norwegian10.1%-98.5%Labor insourcing a big part of its restructuring; involves more than 3k flight crew, maintenance, service personnel
Wizz Air9.2%-6.2%Newest base Bari part of an Italian expansion featuring several new domestic routes; Milan MXP growth as well
Aegean-3.6%-65.3%Note on quarantines: They’re often much stricter in Asia (i.e. people confined in gov’t facilities) than voluntary measures in Europe, U.S.
Aeroflot2.3%-42.0%Increased flights to Minsk, Geneva, and the Maldives; also resuming flights to Japan
S7(not publicly traded)Russian carriers, despite strong domestic recovery, asking for more gov’t subsidies; loss of int’l traffic still hurts
Japan Airlines3.2%-39.2%Regional units Japan Air Commuter and Hokkaido Air System to become official oneworld alliance affiliate members
All Nippon1.0%-35.4%Reports out of Japan suggest Mitsubishi might temporarily suspend development work on MRJ regional planes
Korean Air3.9%-15.2%Rival Asiana an early recipient of money from a new government relief fund established to help troubled firms
Cathay Pacific1.2%-41.4%Uses the term “preighters” for its B777-300ER passenger aircraft with some seats removed for mail and freight
Air China7.3%-20.6%Wuhan, where the Covid crisis originated, now a hot domestic tourist attraction, the Wall Street Journal reports
China Eastern1.0%-4.1%Chinese New Year just a few months away; falls on Feb 12 next year
China Southern0.5%-10.7%Chongqing-based regional carrier China Express to establish new base in Quzhou in wealthy Zhejiang province (Routes)
Singapore Airlines2.0%-60.4%Planning to restart its Singapore-New York ultra-longhaul nonstops next month; will use JFK airport this time, not Newark
Malaysia Airlines(not publicly traded)Remains on death watch as talks with creditors and aircraft lessors continue; offering workers early out options
AirAsia-4.2%-70.3%Fate of AirAsia X intertwined with fate of A330 NEO; collapse would be big blow to Airbus
Thai Airways-4.5%-60.0%Bangkok envisioned as the central node in major ASEAN-wide high-speed railway network backed by China
VietJet0.3%-27.3%Rival Bamboo Airways intends to open new routes to Japan, Singapore, Australia this quarter; Germany, U.K. next quarter
Cebu Pacific8.3%-56.0%Philippine Airlines going daily on its Manila-Los Angeles route next month; currently flies 4x a week
Qantas8.1%-27.5%Sydney airport shows Sept. pax traffic down 96% y/y; Oct. should look somewhat better thanks to eased travel restrictions.
Virgin Australia0.0%-44.5%Signs point to moving the airline’s business model downscale, but no firm plans yet announced
Air New Zealand2.0%-46.5%Auckland airport says domestic traffic reached 65% of last year’s levels during Oct. school holidays
Brent Crude Oil-2.8%-31.5%Average monthly Brent price per barrel in Sept. was $41; hasn’t gone past $46 since crisis began in March

Some stocks traded on multiple exchanges; not intended for trading purposes.

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